Ask the Readers: Should I Sell My Home to Pay Off My Debt?

Yesterday we had a great discussion about some of the financial choices I’m facing, but today it’s time to look at a decision a GRS reader is trying to make. Catherine wrote to ask if it makes sense to sell her home so that she can become debt-free and have the freedom to pursue a simpler life:

I’m in my mid-forties, self-employed in a high-cost city where I live in a one-bedroom condo that I bought ten years ago. I have about $220,000 in equity in the condo (and about $132,000 left on the mortgage).

My mortgage is very affordable because I refinanced into a 30-year loan last year. Still, housing costs eat up about $1500 a month (and would be $400 more if not for the refinance). If I rented, I’d probably spend about that much for an apartment. As part of my housing costs, I pay over $500 each month toward the homeowners association, and there are a number of expensive building renovations looming on the horizon.

I haven’t been putting more money towards the mortgage because now I’m obsessed with thoughts of selling my apartment and renting to give me more flexibility in pursuing a less stressful life. (My dream includes a small house in a lower-cost city, having a garden, etc.) I make a decent living, but I don’t love what I do. On the other hand, I have no idea what I’d do if I switched careers.

Other than my mortgage, I have:

$2,000 in credit-card debt

$14,000 owed on a home-equity line of credit

Nearly $300,000 in retirement and investment accounts

$10,000 in an emergency fund and another $1500 in savings

If I sold the condo, I could pay off my debt, pocket a good chunk of change, and have more time to think about what I want to do with my life. Is it crazy to sell my home when I don’t have my plans mapped out yet? It would be such a relief not to worry about the ever increasing condo fees and the repairs I’ll need to make soon…

When I first read Catherine’s e-mail, I thought she was asking whether she should sell her home to pay off her debt. But that’s just a part of what’s going on here. Catherine has $300,000 in retirement savings, $220,000 in home equity, and almost $12,000 in savings accounts. That’s about $532,000 in assets to just $148,000 in liabilities. Not bad.

Still, I’d be cautious about rushing into anything. While I absolutely think Catherine should explore new careers, I think she should be patient as she does so. Here’s my advice:

Don’t make any sudden decisions. Take small steps, and test-drive choices. First, Catherine needs to decide what her long-term goals are. This can be tough. If she doesn’t know what she wants to do ten years from now, she should do some self-reflection: Take time to see a career counselor, somebody who can guide you through your journey. (My friend Michael — the man who inspired Get Rich Slowly — has helped both me and Kris on our own career journeys. He’s just started a career counseling blog.)

Consider the long-term housing market. Catherine could sell, but she should be aware that many experts expect home prices to recover some of their losses over the next few years. (Some of their losses, not all.) By waiting 24 or 36 months — during which time she could research potential futures — Catherine may find that she’s able to get even more for her house. (Plus, if she’s diligent, she may be able to pay off her $16,000 in debt.)

Don’t rent — not yet. Catherine says that if she rented in her city, she’d probably pay about the same as her mortgage. But when she pays her mortgage, she’s building additional equity in her home, something that renting wouldn’t give her. I’m not a “you must own a home!” zealot — if fact, I think renting can be a great choice — but in this situation, I think Catherine is best served by staying in the house until she’s made a definite decision to live elsewhere.

The more I think about it, the less this is a personal-finance question, and the more it’s a question about personal values. It’s yet another example of how money is more about mind than it is about math; no economist has yet constructed an equation that accounts for the decisions Catherine has to make!

Have you ever faced a choice like this? (Or do you know somebody who has?) What would you do if you were in a ho-hum job in a house you didn’t care for, and had the opportunity to try something new? Should Catherine take a risk — make a leap of faith, sell her home, and move somewhere else? Should she just bite the bullet, stick with her job, and keep at what she’s doing until she retires? What other options should she consider?

#1) JD, your summary of her assets and liabilities is flawed. Her house is an asset worth $352k( $220k is equity and $132k is mortgage). So her assets are $664k and her net worth is $516k.

#2) I’m not sure I trust her mortgage/rent comparison. If she owns 62% of a condo she bought in 2000 (before the housing bubble!) and if she’s refinanced in to a ~5% mortgage owning must be cheaper. In fact if her mortgage payments are $1000 and she has a 5% load on $132k then I’d guess she has a 15 year mortgage and she’s building about $500 of equity with every payment.

Based just on the numbers she’s given, I think she’s much better off owning than renting (to the tune of about $6000/year). In fact, assuming she’s 45 and her house will be paid off by the time she’s 60, she sounds like she’s on her way to an early retirement.

But I should add that my conclusions are based on second guessing. If I’ve misunderstood her rent/buy comparison, then ignore me. :-)

1) Most important being you say you are not happy where you are staying.
2) You said you wanted to pursue future opportunities in life, owning a house and having a debt payment on the house chains you to that particular location and does not allow to pursue something you love far away from where your house is.
3) You pay $500 every month in association fees, which is similar to throwing the money away. That is $6000 every year. Even on the positive side if you assume house prices are going to appreciate 3% every year, that still only is $6000 a year and you have lost that in your association fees. Added to that are the home insurance, property tax, mortgage insurance etc. Those are all money you are not going to see again.
4) House prices are not going to appreciate any time soon in my opinion. there is a lot of home inventory still open for grabs.
5) You can pay off your other debts from the profits from selling the house and move on with life.
6) Selling the house frees up your mind to pursue your future goals.
7) You said rent would also be the same as your mortgage payment, but by selling the house if you choose to you can stay in a cheaper rental place at least for a few months if you need to.

8) Seems like having a less stressful life is your ultimate goal, and yes I accept having to think about a mortgage payment is kind of stressful. So work towards your ultimate goal. That is the most important thing in life. DO WHAT MAKES YOU HAPPY.

All these above cases make a strong case to sell the house, and pursue your dream of having a smaller house with a garden in a cheaper city.

Since renting is the same cost as the mortgage, I would stick with the house at least until you had a real idea of what you wanted next-why not build equity, and even though there are repairs looming, if they happen before you move, hopefully they would be a selling point.

This could be a brief midlife “crisis” thinking period that fades, or you could figure out what you really want. I would take this time to try to pay off the debts you do have, and then either keep more for retirement as you may decide on a new career that is lower paying, or even prepay the mortgage, it would just build more equity that you would get back when you sell.

Selling the condo won’t buy you more time to think…think now. Figure out what career move you want, and start making moves towards it, talk with people in that career, take classes. It may be that you don’t “love” the new careers either, so make sure you think long about it before doing anything drastic like selling your condo.

My guess is that you have thought long and hard about this and writing to ask for our two cents is one of your last steps – you aren’t jumping into anything!

I’m with Raghu, what makes you happy is most important. It sounds like you may be considering a move on top of a career change as part of your bigger plan and if losing ties to your house makes you feel like that is possible then I say go for it. You have money to rent for a few months (wherever you are) to start pursuing your dreams and you owe it to yourself to make those dreams come true. It’s not irresponsible to sell your condo and if it will free your mind it is totally worth it.

It doesn’t sound particularly financially risky to sell. If rent = mortgage, but you have the association fees on top of that the amount that you would lose every month is probably quite similar.

If renting will make your life stress free and better able to plan your next step, I say go for it. I wouldn’t make many other decisions without a more specific plan in mind though.

And if you have that much in savings, I’m surprised that you have that much in non-mortgage debt. Whatever you do, I’d get that paid off asap. I know you can’t pull from retirement accounts but it looks like some is touchable.

To me it sounds like you need a vacation. Maybe some time to yourself to think and do some fun stuff. A change of scenery? Maybe you’re in a rut? But, don’t throw it all away. Maybe you can work more days into your life where you do more of those things that you love to do. Maybe these things could turn into a new career move?

Sometimes when you feel this way you can act spontaneous in areas where you should stay put, just to shake it up. And, if you don’t mind – it looks like you’re at the age where people do a lot of this. Maybe you just need some excitement in your life.

I thought she said she would be paying half what she’s paying now if she rented?

I don’t think she needs to know what she wants to do before she sells. She wants more flexibility. How flexible she can be may be determined by whether or not she can unload the house. We’ve got friends who needed a sudden career change and had to move, but because they cannot sell their house, they’re living with family/friends in the new city (and apart from each other), which is not ideal. If the work situation hadn’t been so bad and the (educational) opportunities been so good, they would have stayed where they were simply because of the house. Knowing whether or not she can sell is important information before making life-changing decisions.

There should be no problem with dipping into the real estate market now and seeing if she can sell her house and get a fair price for it. If she doesn’t feel like being a home-owner she doesn’t need to have her life mapped out for her before doing this. It’s a bit different moving from being a home-owner to being a renter than from being a renter to being a home-owner. There’s a lot more risk from buying than from selling.

Heck, just the fact that she wants a small house with a yard is a good enough reason to move out of her condo. These days it is difficult to be sure of selling the old house in time to buy a new one.

So my vote: if she is dissatisfied, try to sell now. If she can’t, her plans will necessarily be different than if she does sell. Depending on where she lives, she might have to stay put until next Spring since the housing market only has about a month or two left before slowing down for the year in many markets.

I don’t think selling the house *is* a risk. I think staying in the condo is a bigger risk, given the information above. Yes, interest rates are at historic lows but flexibility is important too. And if you’re not in love with the condo and do decide to stay where you are, there are most likely plenty of other houses on the market.

I was talking to a friend in real estate yesterday. Because the university has started talking lay-offs, people have started trying to sell their houses and others have decided not to buy, so the market is a bit off-kilter. Obviously a lot of people are making the decision that flexibility is more important than low interest rates.

p.s. Be sure to put the difference in rent (at least the part that was going into equity) into your retirement accounts. 300K is a good start… I don’t know your income, but in your 40s it is time to think hard about the magic numbers you will need to retire, and 300K most likely isn’t there yet. Many people live off their equity post-retirement– if you don’t have a house that’s something you need to think about, replacing that hidden retirement savings. You’ll probably want to keep the equity that you have built up in a house fund (after paying consumer debts), especially if you plan to buy someplace that requires jumbo loans for their cute cottages with lawns– if you put 40% down you may be able to avoid that additional hassle and interest rate.

p.p.s. Read Your money or your life– great book for midlife career/life decisions.

The real estate market must be right around the bottom now when middle-class professionals who currently own their residences with significant equity and can comfortably pay the remaining mortgage are, for no clear reason whatsoever, contemplating selling to become renters.

My, what a shift in philosophies we’ve seen!

Anyway, to this specific question, I don’t see any reason to make a decision about this before you have an idea what you want to do professionally, and then where you might want to live. I, too, agree, that renting can be a very attractive option depending on one’s circumstances, but there are some things to consider here. You’ve already accepted the negative tradeoffs of buying; mainly loss of liquidity, limited mobility, and high transaction costs. Selling now or selling in 10 years isn’t going to really change their total effects. And it’s not an apples-to-apples comparison to say that your monthly rent would be the same as your mortgage payment. To argue for the mortgage, you’re building equity, which essentially is an investment that will eventually pay off in increased cash flows when you own the home outright (i.e. free rent). OTOH, the equity you have in the house has an opportunity cost, one that’s particularly pronounced when you’re carrying other debts.

A crystal ball would be nice here, but barring that option, I’d say stay put until you figure out your other, more important life decisions, then make your real estate decisions based on that.

sell the house, pay of your debt, and downsize. i think this person just needs someone to nudge them along. the condo fees are outrageous and eat up alot of your money each year and since you have all that equity i would use it once you sold the home for better things such as becoming debt free and having the funds to start whatever new career you decide on pursueing!

The looming condo fees for the major repairs is why I say put it on the market. Those repairs are costly- sometimes several thousand assessed- even if your particular condo could go without. My mom’s street got repaved and her part of the bill was a whopper!

I see the same happening in the property tax market as well. Ours is going up $200 every $1000 next year- mostly because of default finally hitting the system.

Just because you are renting means you have to change jobs! You could always rent and look for your dream place on the side. If you sell, you could be paying cash for the new house. while you are renting you don’t have to worry about rising taxes or condo fees.

I think I will be looking into JD’s career coach- sounds like an idea for you as well!

Simpler life- I think that is what we all are hoping for after this recession.

First thing I would do is pay off the credit card debt immediately with the emergency fund.

I could be wrong (and would love to hear from others if I am!), but I don’t understand the value in having credit card debt and an emergency fund and a home equity line of credit (HELOC from here on). If you don’t want to touch the emergency fund then I would certainly pay off the CC debt with the HELOC. The interest rate on the HELOC should be many times better than the CC rates.

But if I was in your situation, and depending on the details of your HELOC, I would pay off the CC debt first with the emergency fund cash and then as much of the HELOC as you feel comfortable with. The interest savings each month will allow you to both attack the HELOC faster and rebuild the emergency fund.

Again, would love to hear from others if I’m missing something, but the interest rate paid on the CC and the HELOC is much higher than whatever interest could be made on the $10K emergency fund.

Additionally, and again depends on the details of the HELOC, the HELOC can be used as an emergency fund if something happens in the meantime. A HELOC (like credit cards) requires discipline and especially with what I’m describing.

But in summary, you could quickly pay off the CC and the HELOC and be free from that monthly interest (at least $100 per month?). You lose the interest from the $10K which is significantly less than the cost of that other debt. I an $10K emergency came you would be right back to where you are now, but you wouldn’t have been paying all that interest between now and then. But best case scenario is that you not only pay off the CC and the HELOC but you also have time to rebuild the emergency fund.

Anyway, that’s my one thought on your situation and would love the input of others.

Well, since you said you could rent for half the price you’re paying for the condo, I think selling is an good option. You could always invest the money you save in housing expenses to offset what you lose in home equity.

I think we put our lives on hold because we are afraid of taking risk. Do I agree with JD, yes, I do. If you are unsure about what you want to do as a career, then I say wait it out. If you knew exactly what you wanted then I say go for it. Only you can make that decision and no one else. I wish you the best of luck.

If I may – we are considering selling our 2400sq ft house and downsizing to a 800-1200 sq ft home (we have 2 small kids). It would result is us being completely debt free or owing very little on a mortgage. It may sound crazy but it is the freedom it would give us that is so appealing.

I should add that if she has some life goals she wants to pursue and that involve selling her condo, then she should do that. But if she’s seriously worried about her finances then:

1) Based on my earlier post, she will be saving more money by owning than renting and by about $500/month. I believe she was ignoring the significant principal payments she is making on a 15 year mortgage.
2) If cash flow is a problem, she could refinance (again!) to a 30 year mortgage and gain $300-400/month in cash flow (at the risk of reaching retirement age and not owning the condo, but maybe she plans to move anyway).
3) Depending on her homeowners agreement she could rent out the condo and move out to rent a $1500 apartment. Then she’d still be building about $500/month in equity.

From her email it sounds like her immediate concern is the condo fees and looming repairs. Maybe just realizing that her savings rate is higher than she thought (by a possible $500/month) will calm her mind about upcoming fee increases and repair costs. If not, she does have other fairly attractive options.

I would sell the house as it seems that if a better life/work opportunity came along you would take it, owning the home may not make that possible.

I consider myself fortunate that I knew when I started in my career that I was going to love and pursue it for my entire working life, but I also knew I would start at low pay and in order to move up the ladder I was going to have to move a lot geographically early on (I’m in college athletics). This has influenced every financial decision I have made, even when I purchased a townhouse 4 years ago I knew I would be able to rent it for enough to cover my carrying costs so I wasnt trapped by the house, and I’ve never purchased a car for more than $5,000.

I’m about to make my 3rd career move in 7 years to a top tier school where my income will jump significantly and I feel like I am pursuing my dreams vigourisly. I wouldnt have been able to put myself in a situation where I could take this opportunity if I had tied myself down financially. So I say sell the condo if it might tie you down!

You’re right JD, no half as much is mentioned. The HOA is included in her $1500 housing costs which would be about the same as renting in her current high cost city.
Also, not sure why one reader is seeing that she’s in a 15 year mortgage. She states that she just refinanced into a 30 year mortgage last year, so most of her current payment right now is going towards interest isn’t it? Does that change anyone’s advice?

“Still, housing costs eat up about $1500 a month (and would be $400 more if not for the refinance). If I rented, Iâ€™d probably spend about that much for an apartment. ”

Doesn’t this mean that including condo fees, she is spending $1500 a month? And renting is $1500 a month? Where are people getting that it is half as much to rent, or that she is throwing away the $500 condo fees, when she would be “throwing away” $1500 in rent???

Itâ€™s nice to say for her to do what makes her happy, but it really seems like she doesnâ€™t know what will make her happy. She doesnâ€™t want to sell the condo to immediately start her dreams, she wants to sell her condo to â€œhave more time to think about what I want to do with my life.â€ Owning a condo is not particularly time consuming, she can think now before jumping into anything.

I second the career coach idea, it’s very hard to predict what will make us happy career-wise without trying things out. “I could do anything if only I knew what it was” by Barbara Sher is a great resource. I bought my condo in 2006 and definitely feel tied down by it but I’m not sure what I’m going to do yet so I’m hanging around. Someone said rent your place out which may not be simpler but it sounds like you will be able to cover the mortgage with rental prices in your area so that would be a great way to test out other things. You would want to have enough money to cover the mortgage in savings though just in case.

Also there is a kind of insurance that will pay for future condo assessments (repairs in addition to the monthly fees) if they have not been announced yet.

I think the choice of your future career and the choice of your ideal living situation are getting a bit conflated. These are separate choices and since your asking this question implies (and your financial figures also imply) that you have a great deal of flexibility, ultimately, I’d say you can make one decision without having to make the other. If you decide to change careers, and your new job or school requires you to live elsewhere to be close, then move at that time. Likewise, if you stick with the current job, you can move or stay in your current condo, it’s up to you.

So my advice is not think of these as highly interrelated decisions wherein you have to make one lump plunge on both fronts.

However, I recommend doing the job hunt first for a different lower-cost city, then selling the house. If you did move to a lower cost area, the $220,000 you have in equity could entirely pay for a multi-bedroom home with a decent yard for your garden! Imagine having your garden and zero mortgage payments!! Sounds like less stress to me!

But take some time to do some research. Look into other cities that you would like to live in. Look for jobs that you would enjoy in those areas. Not only will you make this decision more informed, but you will both grow equity and “pseudo-equity” by having the housing market improve. THEN sell the house and get going on a less stressful life!!

We are not planning to move or sell our house anytime soon, but we did recently consider going down to one car and a motorcycle (as opposed to two cars). We would then only have one car payment and get that paid off ASAP. But with winter approaching we decided to wait until next spring. I can definitely relate to Catherine’s situation wanting to get rid of her debt.

Seems like the main thing she needs to do is research. She doesn’t have all the facts yet and once she does, she’ll know (hopefully) what she should do. One potential way is to rent out her condo to cover the condo fees (she should be able to do this if the condo assoc allows her & if she’s renting it out with her furniture). She can rent a room somewhere else. It’s drastic but it will save her money, force her to look at her material possessions and decide their importance in her life and also decreases socializing because she can’t invite people over. (thereby giving her time to research)…

There is no easy answer here as the desire to moves sounds somewhat fueled by wanting to make some life changes. My advice would be to make any life changes one at a time.

Don’t forget that if you rent you are stuck in a lease for usually a year. Don’t forget the cost of moving. Just two things I think haven’t been mentioned against renting.

But overall I do like the idea of simplifying, I’m just not sure selling a condo to rent is the answer (except anticipated repairs). If this were a matter of downsizing to reduce expense it would seem reasonable but this almost sounds like a later move as far as monthly costs.

The RE market is slow now also. May be better to wait?

There are certainly a lot of variables to consider, I think some decisions on long-term goals may be needed first.

First off, I think you need to take a breath. Then you need to spend some time *seriously* thinking about where you want to go in life. Right now, the “small home in the country with a garden and a less stressful life” is a fantasy. Fantasies are great — they can either be a pleasant getaway from real life or they can serve as a vision or a goal that you want to achieve. So I would use that as a starting point and ask yourself lots of questions about what appeals to you from this fantasy. You’ll likely get concrete ideas that you can act on — some perhaps right away. Others might take longer.

As for your building having “several expensive” projects coming up, isn’t this part of what your condo fee goes to pay for? I thought condo associations were (or do) make their balance sheets available to their members, so you should be able to know if there is going to be a special assessment coming or not. Ideally, these projects are already funded through the fees.

Keep in mind that moving also incurs other “costs” that you may not be considering. Do you have a great network of friends where you live? Do you take advantage of city life — museums, movie theaters, restaurants and so on? The idyllic country life does have some appeal, to be sure — but there are just as many valid reasons to live in a city, too. I think a lot of people read blogs about personal finance/minimalism and so on and then start believing some of the things that worked for the people writing the blogs. The problem is that only you can know what works for you, and learning what works for you does take some risk and some hard thinking.

You might also want to consider taking some vacations to where you might want to move to, renting houses there for a week or two. Just like a romance, it may be passionate for a while but then you may find that there are lots of underlying problems with the person who seemed so “right” at the beginning.

Note that I’m not trying to criticize “country life” in any way, shape or form — but there are plenty of people who live in a city who forget all the things that cities have that a place in the country won’t. For example, you will likely be able to go to the movies somehow — but cities will tend to have theaters that have small run indie films in addition to the big Hollywood films, and this might be a big thing for you. Ditto for ethnic restaurants, Whole Foods, Trader Joe’s, shopping malls, poerty jams, public transit, walking everywhere, biking and whatever else might float your (city-dwelling) boat. There are many good reasons to live in a city.

Also, you might want to see if there is a gardening co-op in your city, too, where you could keep a garden if you wanted to.

I’m also called Rich, though a different one to the guy at 5:21am, but like him can’t understand why anyone with a $10k emergency fund would have credit card debt. I’m intrigued to the thinking behind this, as unless the card interest rate is 0% it will surely be costing her much more money than any interest earned!

I also think downsizing may be great for you. In this scenario you could consider downsizing to a place that would (a) keep your mortgage payments (and other carrying costs) constant (or lower – depending on your interest rate, and lower condo fees, taxes and insurance the smaller place); and (b) pay off your debt with the difference in cost. But be aware of closing costs on the new place. That could be a cost of doing businss.

But your debt is low – why can’t you pay off the $2,000 in credit cards and then the HELOC by cutting your lifestyle a bit and maybe selling a few things (that could also simplify your life)? Then you’ll just have the mortgage debt – and a lot more flexibility. Without knowing exactly what you make, it’s hard to know for sure, but if you can put even $1,400 per month into paying it down (including your minimum payments now, so not $1,400 extra – $1,400 total) you could be debt free in less than a year.

#1-Have to figure out what your going to do with your career first, everything else can wait. If you have no income or it drops significantly it will impact your ability to make your other plans, plus you don’t want to move until you know whether your new career will impact your location.
#2-It would be helpful to know where you live? If you sold your condo in many areas you could buy a small house (1000-1500sqft) for around 200k or less and be mortgage and rent free.
#3-Tied into the above, I don’t see how you solve the stress issue by paying rent instead of a mortgage. If you can do #2 above or pay off your condo in the next 15 years you would never have to pay a mortgage or rent again and would only have to worry about association or house upkeep fees.
#4-Tied to number 3-take a look at where you want to live and how much it would cost to rent vs buying a small place with a yard in a price range that is either mortgage free or so small that it is well below what you are currently paying now in housing costs or future rent costs. Add up how much future rent would cost vs. not having a mortgage or a small mortgage. The math won’t lie because at your stage you will be much better either staying where you are and paying off your mortgag or in-line with your values-buying a new house with little or no mortgage then having to pay rent for the rest of your life.
*Imagine not having to worry about rent when you are 65, you will have other issues to deal with then.

After reading the story twice, and giving it some thought, I think she should sell the condo, and take the profit from it(~$100,000, depending on the value of the condo) and use that money to buy a house in a less expensive city.

If she did that, she would have little or no rent, would have plenty of space to have a garden, and would free up an extra $1500 a month. With so much less in committed expenses, she would be free to find a lower paying job that she actually enjoyed, or even to go back to school for a second career.

My advice:

1) Sell the house.
2) Pay off you debts.
3) Move to a less expensive city.
4) Buy a home in that city.
5) Pursue your dreams.

This is interesting; when I saw the post I immediately thought “YES YES YES!”, but like the author says, it requires a little more planning.

I think it depends on your income; if you’re paying more than 31% of your monthly gross (HUD guidelines) on mortgage, tax, insurance, and assessments, it’s DEFINITELY worth thinking about selling. Otherwise, I agree with the posters who have pointed out that it really isn’t that much debt comparatively, and you should just wait a while and pay down the debts monthly.

Part of your considerations for selling your condo are those special assessments coming down the line – that is something else you need to think about from a buyer’s perspective. Those special assessments stay with the condo, so it could be something you have to disclose (since you already know about it) and possibly comp a buyer to get the condo sold. Just something to think about since you may end up walking with less cash than you hope.

But otherwise, I’m with a lot of other people. At this point, it sounds like you’re still in the fantasy stage. You need to take some time to flesh out real plans for change. If you want to test the waters, you can contact an agent to put the condo on the market. Or, simply contact a few to ask them to come give you assessments of what you’d need to do to get it into selling shape and how much you could realistically hope to price it.

Like the others, I would not sell until you have more concrete plans in place. Even a rental will tie you up for probably 6-12 months so I’d keep building equity during that time and saving your cash and energy for 1 round of moving costs instead of 2.

I think the association costs, plus the upcoming improvements are a big deal prompting her to think about selling now. I wonder how that affects things.

I agree with J.D. about taking baby steps and making sure you’ll be happy with what you’re moving to if you do change careers. I see people who want to get into IT, but if they aren’t sure they’ll like it, why switch? Figure that out the best you can first, especially if you have a good job now. I think there was a story about someone teaching Yoga on the side to get started, doing stuff like that can help you feel stuff out before you make the jump.

But having the extra freedom from selling and staying in town, if it makes sense financially and from a quality of life sounds fine. Check some apartments out first, and make sure you’re 1-5 year interim will be good there. You also need to weigh the dollars from appreciation/payment equity/association fees to see if now is the time versus selling later. Plus if you’re doing 2 moves instead of 1 by waiting, is that headache worth it.

Like some others mentioned including JD – do not make a hurried descision. For the most part Catherine has been fiscally prudent, maybe this is a passing phase of midlife ‘whatever’.
Selling her condo to move to a smaller town without any goals and no debt will do her spirits no good. She needs a change in scenery. Happiness is elusive. The better option would be to take a vacation to a third world nation to experience some poverty and maybe Catherine will return with a new perspective.

I can relate so much to your post. I’m in my mid-forties and have been searching for what I want to do when I grow up for the last 9 years. The fact that I’m searching becomes confusing to people when they realize that I’m a physician. Many believe that’s the end-all-be-all, but everything has to be a good fit, and many parts of medicine aren’t for me.

I built a house 8 years ago and used home equity to do landscaping and to buy a car, and now, of course, my equity has gone WAY down. I’m not underwater but close. I opened my own practice in my quest to find my niche in medicine, but I had to take out almost $100,000 in loans to do so, $90,000 of which I still owe. And, I ran up my credit card during the first year when I wasn’t busy enough to cover basics and things have been slow since, so my financial situation isn’t nearly as healthy as yours. I’m even looking at bankruptcy.

I started two masters programs and stopped one and am about to stop the other. I live in a city that’s 50 miles outside of a major city and I HATE IT. I reached a point where I was so frustrated because the career changes weren’t panning out to the be the saviors I thought they would be. But, with the help of a career counselor and a therapist, I’ve FINALLY realized that what is missing in my life is a life. Because of where I live and because I’m single, my social life has been pretty non-existent, but I mistakenly focused on my career because I felt it was only thing I could really do anything about. The mind can easily play tricks on us, so it has taken years to realize what I’m really missing. Although medicine definitely has it’s problems, I’ve realized that when I have a fulfilling social life, it’s really not so bad. It’s just when I have nothing else to focus on that it seems unbearable. I’m now able to see the benefits like the fact that I can make a decent living and should always have a job. My first masters I started was in public health, and I’m considering going ahead and finishing it since I’d only have about a year and a half to go. The one I’m enrolled in now is interior design, and after two classes, I realize that it’s not what I want for a career. It’s WAY too much work for the pay off. I didn’t even work that hard in med school. Some days I’m drawing for 12 hours a day. So, I agree with all the advise about dipping your toe in before making drastic changes. My biggest interest is in the built environments impact on public health which is why I’ve looked at public health and design, but there is really no direct route to work on those issues. However, the people I know of who are have an M.D./M.P.H. so I’m thinking that might be the best and least costly route

I guess I say all this to say that I agree with making small changes until you know exactly what you want. I think I’m on the right track finally, but it’s taken years and I’ve floundered and spent a lot of money along the way. Sometimes what we have seems bad only because there isn’t enough balance in our lives or for some other less than obvious reason. The need to change may be there, but what we think needs to change can be deceiving.

JD, I agree with your response. Catherine can enjoy one of the major benefits of good personal finances: she has options. In her case I would also wait and see what I would want to do with the rest of my professional life. No need to make any rash decisions. She is in an enviable position.

I wouldn’t sell unless you could find something cheaper to rent. What’s the advantage of spending $1,500 to rent when you can pay that much to eventually own?

You’re self-employed, could you move to a lower cost area with no drop in income? If yes, step 1 would be to start looking for the small city you dream of, then go there to check it out for a week or more.

On the other hand, if I were you, I would probably sell the condo, use the equity to pay cash for a place and live off the nest egg while working part-time for the rest of my life.

El Cheapo’s analysis of the assets/liabilities is off, too. 132K in mortgage debt is not an asset.

And that $500/mo association fee is an outrage, for something with such a low value. I would sell it at the first opportunity, but that’s just me – I’m a happy renter. Oh – and I’d really put that $400/mo liberated by the refi, to pay off the HELOC and the CC debt. Both are anchors.

I detect a whiff of midlife … not “crisis” precisely, but that classic case of “there must be more to life.” Having been through it myself I am very much in favor of spending some TIME – and a little money – before committing to any big changes. Often we find it’s not the residence or the job (or the partner) that’s the whole problem.

First, meet with a career counselor. Find someone who will debate you through all the objections you might reflexively come up with to staying in your current job, and then make suggestions for YOU to debate about possible different jobs.

Second, make a list of all the recreational or creative things you’ve ever been interested in attempting, and start reaching out to groups in the city that do these things. You may meet people who make you more excited about being where you are. I’m not talking about a “relationship,” necessarily, but about building a social network that makes you value your current situation and feel contented in it.

And third, travel a little. Go to a few smaller towns that represent what you think you want. Spend a few days there and see what it’s really like. Meet people at the hardware store and drive around the surrounding countryside. Small towns have tremendous disadvantages for single people that you need to take into consideration. They also have tremendous potential for providing an instant community if you find the right place.

I would love to hear how this all works out for Catherine, a few months down the line.

Take it from me, downsizing your home is a great feeling and would recommend it to anyone. Property is taking a long time to sell, so you will have many months if you need time to think on your career objectives while selling your property. It is a tough market out there especially now that the tax credits have ended, you may find out it is going to be tough to sell.

If your job is mobile (meaning if you move, your salary won’t be majorly impacted by losing local customers and having to find new ones), then put the house on the market today and start thinking about where you want to live ASAP. Once you get to your new city, if you still hate your job, find a new one.

If your job isn’t mobile, or if it’s really driving you crazy, then figure out where you want to live and actively pursue a different job there. When the right one comes along, then consider selling and getting out of your current situation.

Wow, this is a real toughie. I would say JD is about right, and if it were me, I would stick around unless I had a very firm idea of where I wanted to go and what else I wanted to do.

My family is in a similar position, although we are renters. We live in New York City, and would like to buy a modest condo in part because prices have come down (a little – no crash here) and we are expecting a child. We cannot afford to rent a 2-bedroom apartment, as the median 2-bedroom rents for $4300k – a month.

I don’t see prices coming down much further, and yet we hesitate because theoretically we *could* move to a cheaper city and have a tiny mortgage – our savings would go very far there. My job is, of course, portable, but my husband’s is not. The dilemma is fairly paralyzing, and we have not made any offers on apartments because of this.

Is there anywhere near where you live where you could go on a quiet weekend or weeklong retreat? It is very helpful to get away from the noise we live in have time to really think, really listen to what we need. About three years ago I started to feel the itch that I was not living the life I wanted. Too stressful a job, not enough time for family, really hated what I was doing for a living. I didn’t quit right away, but it was the impetus for me to start researching what my exit strategy would be and what I would do on the other side. I started paying down as much debt as I could and saving as much money as possible. I even took a hellish promotion knowing it would only be for a year or so and would give me the opportunity to sock away even more money. I started taking classes in my real interests and found a real groove and happiness, opportunities and contacts opening up. Then I quit my job, knowing I had a financial cushion for about a year or so. Am very happy. I am renting right now and perfectly happy with that. Who needs the stress of owning right now? Not me. My priorities were to put myself in a good place to launch a new career/lifestyle and I am so happy I did it. Life is short. Don’t waste it on worrying about having stuff. Make the most of it. You will feel finally alive.

I don’t see why you have such a high emergency fund with debts like you have. I would take all but $1-2K out of the emergency fund and the $1500 out of savings to put toward debt repayment. Then I would work toward paying the debt as quickly as you can. THEN, when you are already debt free, have built more equity on the condo, have built up your emergency fund again, AND have had time to think about life, make the decision whether you want to sell or not. And who knows, maybe your condo will be worth more then. I’d say that’s a win all around.

I hope I’m not repeating someone else’s idea ( I haven’t read all the responses yet) but I wanted to get this idea down before I forgot it.
Make a lateral move and sell the condo for another one that costs exactly the same as your present condo but that does not have upcoming repair costs, maybe something newer. Pay off all your debt with the equity from the first condo, stretch out your new mortgage to 30 years or so making the payments nice and low, giving you stress free time to think while you decide on your bigger goals. This of course assumes that you have no problem selling your condo, you didn’t mention that that would be a problem so I’m guessing you can.
This leaves you with no extra debt, low payments and you are still paying some down on a new mortgage and maybe prices could even go up by the time you sell.

If rent and mortgage are about the same, and she has no immediate plans to move, I’d keep the house. It may take some time for her to figure out what she’d really like to do, and when that happens THEN she can put the house on the market.

Rents may be similar to condo costs NOW but rents increase every year, most of the time. The mortgage payments don’t go up with inflation. So if she sells and ends up renting for a number of years, she could end up paying more.

Besides that, waiting allows the housing market to recover, and it might lead to a better price on the condo. The condo market is pretty depressed right now.

It seems to me that the real question is: “How badly does Catherine want to move?” The answer I see is that she very much wants to move and make a significant life change.

She’s got a large net worth and can generate a large amount of cash by selling. She can move to a lower cost, lower stress area. Yes, her condo may (or may not) make significant gains in the next few years, but which would you rather have $10-20k or 2+ years of extra happiness? I know which one I’d pick.

I say go for it as long as you don’t have to sell the condo for a ridiculously low price. Even if she moves and doesn’t like it, she can always move back.

Also remember condo fees are paying for stuff you might have to pay on your own if you rent. My condo fee covers hot water, garbage pick up, home insurance for the outside and structure of the building, snow removal and landscaping among other things. Mine is 178$/month though so I’m guessing you live in a high rise with expensive elevator repairs? Or maybe the condo board had bad investment vehicles for their money. The financial stability of the condo board accounts is something I would have never known to think about when I bought my place. For the person saying to buy a new condo that doesn’t need repairs, it is hard to predict if a place is going to need repairs that the board will fund with a special assessment. My board is really good about timing the upgrades and repairs over a period of time so that we don’t have to do assessments (so far). Depending on how much her assessment will be the closing costs alone may be higher.

Thinking about your life, job, home is good.
If possible I’d sell! I think the housing market will be low for years. Likely can even rent a similar condo for less than you currently pay. Additionally, if your life changes you can move in 12 months when the lease is done. New town, new neighborhood, different view out the windows. People would Love to have you as a renter. Good credit, prompt pay etc. They will keep rent low to keep a person like you.

I’ve always loved owning my own home, but the true cost of that ownership was very high. Tax write off not really a winner if you run All the numbers. A nice rental house or apt. can be very comfortable and allow you much freedom.
Great topic!

@ chacha1: “El Cheapoâ€™s analysis of the assets/liabilities is off, too. 132K in mortgage debt is not an asset.”

No, El Cheapo got it right. Her condo is the asset (not the condo equity), and her condo value is currently made up of $220K in equity and $132K still mortgaged, for a total condo value of $352K. So her N.W. balance sheet would look like this:

Assets = $352K condo + $300K retirement + $12K cash savings = $664K

Liabilities = $132K mortgage + $14K HELOC + $2K cc = $148K

Net Worth = Assets – Liabilities = $664K – $148K = $516K

JD essentially counted the mortgage balance twice in his numbers, by only including the condo equity in her assets (which already takes the mortgage balance into account) and then including the mortgage balance again in her liabilities.

I have to disagree with JD here. Sell the condo. You’re paying $500 per month to the condo association that you’ll never see again. Your mortgage on the condo is $1500. You expect to pay $1500 to rent. This means you’ll still have an extra $500 per month (the current condo fee) which you can aggressively save towards paying cash for a house.

Different individuals might need to make different choices in this circumstance. But you are obviously eager to payoff your debt and it also seems that you will soon be moving anyway. If it makes you more comfortable and you achieve greater personal fulfillment from paying off the debts now, then by all means, do so!

As a GRS reader with no financial authority I would wait to sell the condo since it costs as much as renting. Explore career interests first. Hopefully, once you find a new career choice you can sell your condo for a little house with a garden. Also, consider taking a little weekend retreat to an area you’re interested in living. Maybe it would clear your head.

@ Daniel – She is not paying $1500 for her mortgage. She is paying $1500 for her *housing costs* which she says includes the $500 to her condo association. Therefore, she breaks even paying $1500 in rent, but builds no equity. She does not gain $500 in cash flow by renting.

I am estimating that her housing payment breakdown is approximately $700 principle+interest, $300 in real estate taxes, and $500 for her condo association (which includes her homeowners insurance).

I think taking the step toward exploring your career and life choices that come with it, will help unlock the answer.

You’ve got assets/savings/equity, which is better than most; (2) you have an income — better than many in this economy; and (3), you are thinking of a career/life change. Based on your question, if I had the first two going for me, I would say spend the time first to figure out the career step first.

But note — exploration may come at a cost. School or a trade, or simply having to carry two jobs at once — one that sustains you and other to nourish your soul — means that you have to be willing to spend the time and energy to focus on this.

But, interestingly enough, if you are committed to finding out, once you come closer to that career answer, and potentially who you are, you’ll not only know pretty much what you want to do, but *where* you want to be when you do it.

I’m sensing a cash flow problem here. Why else would there be the credit card and HELOC debt so soon after refinancing? What did you use those funds for? (Just theorizing here) if it was because you were feeling twitchy and needed vacations or a new car, then I think you need to be really careful here or you could end up making another bad decision for fear of sitting still. If on the other hand you blew up the HELOC to pay off old student loans or to help out your family or similar, then that may be a different situation.
Is ‘the simple life’ something that looks good from your seat now, or is it something that you know you could live, because you’ve been practicing it and working to downsize all along?
I know I get the itch every few years, and have to work hard with yoga and retreats and deep thinking on what it is that I’m really after.

It sounds like emotionally, she wants to move. Having been hit this year with $15,000 in special assessment condo fees, I feel her anxiety, but I would spend some time really analyzing and exploring what she wants to do before taking the action of selling her condo.

$500/month on maintenance fees comes out to about 1.7% of her home value. This isn’t an terribly outrageous % IF this includes some utilities and/or amenities (gym, pool, undergroud parking, etc.). The average single family homeowner should expect to spend 1.5-2%/year on maintenance.

My only advice re: the possible relocation and career change would be to search out people who have made a similar change recently and ask them if it was all they expected. I think there is at least one poster above who mentioned feeling very positive about downsizing and being mortgage free.

If anyone has read the book “Stumbling on Happiness”, a vast amount of research has suggested that the only reliable way to predict if something will make us happy is to ask someone who has made the change. In a nutshell: Since our view or the past (and even the present) is wholly subjective and biased, we are very limited in our ability to predict our future feelings.

Wow! Sell!! and do what you want. Give yourself some rules to remain in a fininicial safe zone, then go for the adventure. If you wait too long you may never. so many excuses, you will not have the time, my health prohibits my desires or you are just plain tired and lose your ambition. Life is to live and dream.. and it is so very short. Take care and have some fun!

It’s hard to do even a back-of-the-napkin calculation without solid numbers, but assuming an equivilent apartment would actually rent for $1500, that puts the fundamental value of the condo between $225,000 and 270,000. It’s highly unlikely this is the bottom of the market in your area, just based on the numbers you’ve given. If you can sell for $350,000, I think you should. If you think you’re going to sell in the next couple of years anyway, better to do it sooner than later.

I also think you should sell from a non-financial perspective. It sounds like your home is causing you stress. It shouldn’t. That’s supposed to be one of the benefits of owning your home, the feeling of security it brings that you can’t be kicked out with no notice. It sounds to me like your house feels like an anchor rather than a sanctuary. So, cut the chain. $200,000 in the bank and an optimistic attitude will carry you a long way.

If she wants to move then I don’t see any major reason to stay in that condo. SHe has $220k equity in that condo which is a lot of money. I don’t see any reason to expect high appreciation in the short term and she’s spending a lot to live in that condo and would probably do better renting. If she wasn’t in such a high cost of living area then buying might make a lot more sense.

If she has a sense she is going to move then maybe she should stop and think about what her plans really are. She might talk to a REaltor and look at putting the house on the market. It is possible it could take many months to sell.

Sounds to me like this is so much more about life than about finances. The finances we can control (to some degree or another). Whereas the life issues…not quite as easy.

Perhaps give yourself a timeframe – like 6 months. Agree to stay in the condo for 6 more months without even contemplating selling or the upcoming assessments or whatever. (Hell, you have enough equity in the place that you could pay the future assessments for a buyer and *still* buy a house in a less expensive city.)

Then begin to focus on your direction in life. What you want to do & who you want to be.

I’m guessing that if you can make this kind of agreement with yourself, you’d find a bit more clarity. Because right now you’re trying to control the numbers, because it’s so much easier to run the numbers than to figure out where we’re going in life.

I agree with JD’s assessment for the most part. The part I don’t agree with is I don’t think the housing market will get better. I don’t care what the cheerleaders are saying, the analysis just doesn’t prove it to be so.

I think we have a few more yrs of falling equity. So selling now might make sense, rent a few yrs and then buy when the market hits its lowest.

I know this isn’t what people want to hear but a rise in RE in the near future is a pipe dream not reality.

This is a tough choice. I agree with many of the comments that you need to further assess your plans. Without a concrete idea of what you will do once you sell the condo you might find yourself in a similar “ho-hum” situation when it is all said and done.

“It would be such a relief not to worry about the ever increasing condo fees and the repairs Iâ€™ll need to make soon”

If this helps you make a decision about your future sooner I say do it. Renting for now, being debt-free, so you can concentrate on a new and exciting career, in a lower-cost-of-living-area (where you can finish up your retirement savings goals) is probably your best bet as condos are notorious for their high maintenance fees. You would do a lot better in an apartment without the high fees or even downsizing to your own home.

With all that said, I agree with J.D. and you shouldn’t rush into anything until you have that “dream” career lined up.

Yep, this is a GREAT time in history to just junk your job and move to a small town with seven minimum-wage job openings! Try selling the condo without disclosing the upcoming assessment and get an up-close and personal acquaintance with real estate attorneys. Wave “bye-bye” to your equity!

Rather than a career counselor, it sounds to me like Catherine really needs to spend some quality time with a good therapist.

“Iâ€™m obsessed with thoughts of selling my apartment and renting to give me more flexibility in pursuing a less stressful life. ”

Condos are maintenance-free. Not too many landlords are giving you “less stressful” life experiences, either.

“Obsessed” is a bad word to base decisions on! Get some professional help before you destroy your life!

I’m not going to give any life advice – I’m not qualified to do that. But here are the financial implications of some possible life choices:

As long as you intend to remain in the same city, staying in your current home will likely beat renting unless the special assessments for association repairs are enormous. By substituting rent for your mortgage payment, you lose the equity that your mortgage payments will be building up.

Also, one of the major problems with selling your home now is that you’d need to put the proceeds into a highly liquid, low risk investment and earn essentially zero return on that money. You can’t afford to put it in equities or anything else that has a long time horizon if you want it available to buy a new home in the near future.

However, once you do decide to move to another city, and you know that will make the move in a year or so, it could be a good idea and sell the condo and rent while you look for your new home in the other city. By selling your home first, you know what you can afford. Buying a new home first puts a lot of pressure on you to sell your own home fast (even if the sellers of your new home accept a contingent sale.) This is particularly true if the new home is in a new city, where it will be harder for you to look for homes to buy.

If anything, I would put the condo out there and test the market. Who knows, it may not be worth what you thought and that could affect your decision. Condos have taken a really hard hit these past 2-3 years.

While some so-called real estate experts are predicting that prices will recover an equal number of investment advisors are predicting that values will continue to fall. Its always wise to question the motivation behind opinion. If its someone who makes a living selling real estate, I’d really have to question everything they say.

I’d sell the condo and invest the proceeds in dividend paying preferred shares. There are several paying out better than 5.5% and those dividends could go a long way towards paying the rent. Dividends are taxed at much lower rate than regular income and even a 5% return on say a 400K investment would yield 20K, which even after taxes would go a long way towards covering the rent.

@Carrie (#53) – I think you need to drop the “k” after $4300 otherwise only Warren Buffet will be able to afford monthly rent of $4.3 million–and not for long.

Catherine, don’t listen to the commenters telling you to not disclose the upcoming special assessment. If you do, like SLCCOM said, you can “wave bye-bye to your equity.”

I think you need to think through this dilemma–and wasting time by selling your home and finding a new one isn’t going to help. Frankly, it almost sounds like a mid-life crisis and you shouldn’t be taking impulsive action.

I am in a remote place right now and only have an internet connection when I am near a library. I drove to a library to say what I’ve been wanting to say the two times I read the blog post and comments.

I want to encourage you to jump in and try something new. You already said work is not satisfying and see reasons to leave the condo….. I bet when you make a change, other life decisions will flow from it, from the space you create in your life.

I am mid 40’s too, and discovered something about how decision making works in my life. For the past ten years, I’ve thought often about moving, and did more than thinking. I methodically worked out the finances, the options, and what I was seeking, many times. But I stayed put in my work and my city, and bought a tiny country place in a nearby state, a second home.

I recently decided to retire from practicing law next year, after twenty years, because I have not been enjoying it. Catherine, this is the amazing part. Once I decided to do that, I felt freedom to do more. I will leave the city where I am living, sell or rent my house, and do something new. I don’t know what that will be, but I have ideas. I also know I am not a country girl, so I can’t just sell my city house and live in my cabin in the country and be happy. (P.S. If I my rent my city house, I will hire a neighbor to be property manager and fix things.)

I am not focusing on your finances, because I don’t see that as a burning issue. Your finances give you options in life.

I want to discourage you from taking it slowly, when you already know the work is not satisfying and want to leave the condo. I want to encourage you to make one decision and then another, and see what comes from the changes you make. With each step, you will be in a new place and see options you could not see before because your situation and perspective changed.

I say, if you are not happy. THEN MAKE CHANGES. Life is to short! If you sell the Condo, you are mobile. You can do anything you want. By selling the condo, it will free up your time to do other things. You will not have to worry so much about the day to day and can focus on the tomorrow. I say do it. You can always take a part time job to produce enough income to keep your life going like it is. With the Assets you have, if you keep them in the bank (and don’t touch them) they should continue to grow.

With her balance sheet, why she doesn’t sell some of her non-retirement investments to pay off her credit card, HELOC and beef up her emergency fund? Or put the freed $400 towards that debt?

If she’s going to be making a significant change, she’s going to need at least a year of expenses in an emergency fund. There’s no telling how long it will take to sell the condo and if she gets impatient and rents while still making mortgage/HOA payments, it’s going to be a drain on her finances.

My parents are dealing with this right now – my mom got impatient after waiting 3 months for their town home to sell and now they’ve made a cross-country move. Fortunately, they haven’t bought a place in their new location yet, so they aren’t struggling with two payments, but I’m afraid that’s going to happen soon.

The math on the mortgage debt does seem a little odd. I’m guessing the condo appreciated significantly in the time she’s owned it? Otherwise I don’t understand, with record low interest rates, how financing a third of what she initially bought the house for only drops the cost by ~30%.

Putting the condo on the market as soon as possible can’t hurt. It’s likely it’ll take months to sell. I don’t know if she needs the extra stress and expense of moving and showing the place, but it will at least give her a realistic idea of what she can get for it.

I second the recommendation of a therapist or life coach. Sometimes we obsess about things we think we have control over when things we don’t have control over aren’t going so well.

One more thing, because it’s been repeated many times in the comments.

Laws regarding disclosure of property defects vary by state. Where I am, a seller can disclose everything she knows about defects, or give the buyer $500 at the closing and not disclose anything. This is a common approach.

Also, I don’t know if a potential — not yet announced — future assessment is considered a property defect.

Money wise she is in great shape. This whole decision is based on her restlessness. If quality of life would be better than go. Otherwise stay and pay off those debts – you have the money. Relax and enjoy your financial success.

I was wrong. She does clearly state she refinanced to a 30-year mortgage. I guess I was just incredulous that owning a home with a 62% equity could cost as much as renting and equivalent space. That’s what I meant when I wrote that something doesn’t smell right in her description of her situation.

She should rent out her condo and join the Peace Corps for a few years, the sell the condo and move to the small country home with the garden!
Seriously though, she should stay put for a while, since renting in the same location makes her worse off financially, assuming her statement of renting costs is accurate.
She could do some research on different locations she’d consider retiring to and what the job market outlook is for each one in the next 10-15 years. Additional considerations are cost of living, locations where there are family or friends and what skills/talents she has now that can transfer to other jobs/sectors. Maybe there are skills she can acquire to support the future demand in potential retirement locations.
Once the research is done and she has it narrowed down to one or two, vistit, talk to people and find out what it’s really like to live in those locations. If she still wants to leave, put the condo up for sale, and start looking for a new place and get out of town!

Here’s our story. We sold our house in 2008 for a very nice profit. After we paid off the mortgage and credit cards, we spent 2% of the profit on a very nice vacation. We let the rest sit in a high yield (4%) Rewards checking account while we considered our options. We then maximized our HSA contributions; put some in our retirement accounts; and a few cds. We rented and waited for two years. While we waited, we kept seeing the housing prices drop. Thankfully, we were able to pay cash for our house. We were not committed to any careers, so we were free to move about as we wished. The down side is we were not committed to any careers and now find it challenging to find good/higher paying jobs available. But, the upside is we have no debts of any kind and there is so much peace in that.

I just want to thank JD and everyone who wrote in for the thoughtful comments. I especially appreciated those who shared their own stories. You’ve given me a lot of excellent advice to mull over and yes, I will take JD’s and not rush into anything.

A mortgage of $132,000 would yield a monthly payment of $708 a month @ 5 percent. By owning you only have to pay half your rent. After the mortgage is paid off then you only have to pay $0 per year for the rest of your life.

I agree with her to sell and take time to think. I am also in that same boat after my divorce a few months ago. I hope to sell and just rent for 6 months in one State then might move to another for 6 months to see where I want to live. I am retired so free to move with my 2 cats. Downsize is for me. Hope to sell the house with everything in it. Just the up keep cost a lot. Want to pay off my debt and be free of it for once in my lifetime. Then go from there. So many Repo’s out there home still losing value. I am with her on selling it. Cut losses now before homes take a harder hit. Jude

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My name is J.D. Roth. I started Get Rich Slowly in 2006 to document my personal journey as I dug out of debt. Then I shared while I learned to save and invest. Twelve years later, I've managed to reach early retirement! I'm here to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you get rich slowly. Read more.

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